Daio Paper : （Delayed）Announcement of the Revision of the Corporate Governance Guidelines

ENGLISH TRANSLATION FOR REFERENCE PURPOSE ONLY

This notice is an English translation of the original Japanese text of the timely disclosure statement dated December 9, 2021 issued by Daio Paper Corporation, and is for reference purposes only. In the event of any discrepancy between the original Japanese text and this English translation, the Japanese text shall prevail.

December 9, 2021

To whom it may concern:

Company name:	Daio Paper Corporation
Representative:	Yorifusa Wakabayashi
	President and Representative Director
	Chief Executive Officer
Stock code:	3880
	(First Section of the Tokyo Stock Exchange)
Inquiries:	Shuhei Shinagawa
	Senior Executive Officer
	General Manager of Corporate Planning Division
TEL:	[phone]

Announcement of the Revision of the Corporate Governance Guidelines

Daio Paper Corporation hereby announces the revision of the Daio Paper Group's Corporate Governance Guidelines at the Board of Directors meeting held today. The details are as follows.

1. Purpose of the Revision

On April 1, 2021, the Company changed the structure of its executive team and revised its executive officer system in order to speed up management decision-making and strengthen the Board of Directors' supervisory functions by clearly defining the positions of "the Board of Directors responsible for decision- making and supervision" and "Executive Officers who execute business operations".

In June 2021, the Tokyo Stock Exchange revised the Corporate Governance Code. Hence, based on the changes to the structure of executive team and executive officer system, we revised the Daio Paper Group's "Corporate Governance Guidelines" in order to more clearly present the relationships between our basic approach to corporate governance and our management philosophy, as well as our unique approach to management.

2. Revised Articles

Article 2: Basic Approach to Corporate Governance

Article 3: Overview of the Corporate Governance Structure of the Company

Article 5: Composition of the Board of Directors

Article 6: Procedure for Electing and Dismissing Directors

Article 7: Procedure for Nomination of Audit and Supervisory Board Members * Please refer to the attached "Corporate Governance Guidelines" for details.

End

ENGLISH TRANSLATION FOR REFERENCE PURPOSE ONLY

This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail. The company assumes no responsibility for this translation or for direct, indirect or any other forms of damages arising from the translation.

Corporate Governance Guidelines

Established October 27, 2015

Revised December 13, 2018

Revised May 27, 2021

Revised June 29, 2021

Revised December 9, 2021

Daio Paper Corporation

Chapter 1 General Provisions

Article 1 Purpose

This "Corporate Governance Guidelines" (hereinafter referred to as the "Guidelines") set forth basic guidelines for the corporate governance of the Daio Paper Group (hereinafter referred to as the "Group") for the purpose of establishing effective corporate governance, under the following Corporate Motto and Management Philosophy, in order to realize its sustainable growth and the enhancement of corporate value over its medium- to long-term.

Passion with Sincerity

Shaping an Abundant and Affable Future for the World

"Dedicated" Dedication to manufacturing

Our dedication to society and local communities drives us to innovate and deliver new value born from attention to regions, resources, and realizations.

"Attentive" Bonds with local communities

Our attention to individual cultures and regions drives us to contribute and work in harmony with local communities, demonstrating our standing as good corporate citizens.

"Integrated" Corporate culture providing safety and motivation to work

We will strive to maintain a diverse and friendly corporate culture that offers new challenges and a sense of security and trust to employees.

"Organic" Contribution to the global environment

We will actively work to grow organically, solving environmental problems and realizing a sustainable society for the world over.

Article 2 Basic Approach to Corporate Governance

The Group promotes sustainability management based on its management philosophy "Shaping an Abundant and Affable Future for the World" to realize sustainable creation of values for all stakeholders and society as a whole.

In this context, the Group considers corporate governance as a mechanism to realize sustainable growth and the enhancement of corporate value over medium- to long-term and as ensuring the functioning of the mechanism, by clarifying the role and responsibility of "the decision making and supervisory functions" and "the business execution function" of the management and promoting swift and flexible decision-making and implementation.

Amid the rapidly changing business environment, the Group has been working on reforms for achieving medium- to long-term sustainable growth such as business portfolio reform and speeding up global expansion by constantly adapting to the changing times and with foresight. At the same time, the Group will further enhance governance of management in line with the basic principles stated below with a right balance between offense and defense through initiatives, such as improvements in organizational structure to manage risks that are becoming increasingly complex and diverse, along with the expansion of overseas business and changes in society.

1. We honor the rights of shareholders and make efforts to provide an environment in which shareholders can properly exercise their rights and to ensure substantial equality among shareholders.
2. We acknowledge the importance of social responsibility and ensure appropriate collaboration with various stakeholders, including shareholders, customers, business partners, employees, and local communities, thereby engaging in sound business activities.

1. We ensure timely and appropriate disclosure of corporate information, including non-financial information, to be correctly understood and trusted by various stakeholders.
2. The Board of Directors provides highly effective supervision over Directors based on our fiduciary duty and accountability to shareholders.
3. We have beneficial and constructive dialogue to all shareholders as part of our efforts to achieve sustainable growth and increase our medium- to long-term corporate value.

Chapter 2 Corporate Governance Structure at Daio Paper

Article 3 Overview of the Corporate Governance Structure of the Company

The Company is a company with an Audit and Supervisory Board. As such, the Board of Directors makes decisions on important management policies and oversees business executions, while the Audit and Supervisory Board and its members, which is independent from the Board of Directors, audits the Directors' performance of their duties. The Management Meeting, which consists of the management team members (i.e., Executive Directors and Executive Officers), makes decisions on matters delegated by the Board of Directors to ensure prompt decision-making, efficient management, and enhancement of business execution function. We have the executive officer system in order to make prompt and courageous management decisions and establish a strong and flexible business execution structure for greater corporate value by clearly defining the roles and responsibilities of the Board of Directors and Executive Officers. The Board of Directors' primary function is to make decisions on critical management matters and supervise business execution, and that of Executive Officers is to execute operations.

We have non-mandatory committees in order to ensure the objectivity and transparency of our management, along with robust corporate governance and compliance across the Group. These committees are the Compliance Committee that deliberates and makes decisions regarding the consolidated management of comprehensively identified and assessed risks, coupled with countermeasures, and measures based on the severity of each risk; the Remuneration Committee that finalizes the evaluation of and remuneration for each of our Full-time Directors according to the policy on remuneration resolved by the Board of Directors; and the Nomination Committee that deliberates matters regarding the nomination of Board of Directors candidates and the election or dismissal of Directors and reports the outcomes of the deliberations to the Board of Directors.

To advance sustainability management and diversity management across the Group to continuously increase our corporate value, we have the Sustainability Committee that deliberates and makes decisions on sustainability-related initiatives, and the Diversity Committee that develops basic policy on diversity promotion, sets critical challenges, and advances the efforts to meet these challenges.

Article 4 Roles of the Board of Directors

1. The Board of Directors supervises the overall management, including the performance of duties by the management team, in order to ensure the fairness and transparency of management. The Board of Directors makes decisions for the Company by determining the execution of critical business operations specified in laws and regulations or the Articles of Incorporation.
2. The Board of Directors delegates the authority over the execution of and decision-making on other business operations than the critical operations mentioned in the preceding paragraph to lower- level meeting bodies, including the Management Meeting, and to the officers in charge of those operations. The Board of Directors supervises the performance of duties by those meeting bodies and officers.
3. Outside Directors supervise business execution by the Board of Directors and the management team and watch for any conflict of interest between the Company and the management team, among others, from stakeholders' perspective in order to realize the Group's sustainable growth and the enhancement of corporate value over its medium- to long-term.
4. Given the importance of issues related to sustainability, the Board of Directors sets out the "DAIO

Global Environment Charter," which is the basic policy on social responsibility that the companies across the Group should fulfill to protect the global environment, thereby raising officers' and employees' awareness. The Board of Directors works to help with the sustainable development of society and continue increasing the Group's corporate value by actively launching initiatives, with giving due consideration to stakeholders, to resolve the issues, based on the discussions at the Sustainability Committee.

Article 5 Composition of the Board of Directors

1. The number of the members of the Board of Directors at the Company shall be within 20 as specified in the Articles of Incorporation. Basically, it must be the number that is necessary and appropriate to ensure an effective management structure as well as substantive discussions at the Board of Directors meetings. Due consideration is also given to diversity and expertise within the Board of Directors.
2. Considering the importance of Outside Directors' functions in corporate governance, one-third or more of the members of the Board of Directors shall be independent Outside Directors.
3. The Company selects Board of Directors candidates so that the Board of Directors will be evenly balanced between human resources capable of leveraging their strengths for the Group's business operation in a wide range of business areas and those who are suited for business management. The Company ensures that the Board of Directors as a whole has a good balance of knowledge, experience, and skills, along with diversity, that are suitable for the Group's business areas.

Article 6 Procedure for Electing and Dismissing Directors

1. The Company's Board of Directors candidates shall be selected from a wide range of human resources in accordance with the guidelines on nomination stated below and officially nominated by a resolution of the Board of Directors. Before the resolution is passed, the Nomination Committee shall provide its opinions. The Nomination Committee is chaired by an independent Outside Director, and more than half of its members shall be independent Outside Directors.
2. 1. A person who has extensive knowledge and experience related to the Group's business management and operation.
   2. A person who will understands social responsibility and missions in operations and will be capable of managing and operating business with fairness and accuracy based on high ethical standards.
3. Notwithstanding the preceding paragraph, the Company's independent Outside Director candidates shall be selected from a wide range of human resources in accordance with the guidelines on nomination stated below and officially nominated by a resolution of the Board of Directors.
4. 1. A person who meets the Company's criteria for determining independence and have no risk of causing any conflict of interest with general shareholders.
   2. A person who understands the Company's Management Philosophy and fully understands the
      Group's social responsibility and role.
   3. A person who is fully aware of his or her role as an Outside Director and be capable of supervising business execution and management by the Directors and of providing accurate and appropriate opinions and advice, applying his or her knowledge of and activities in the fields of corporate management, the economy, legal affairs, accounting, tax, and audits, among others.
5. If any event occurs that makes it difficult for a Director to properly perform his/her duties, such as a violation of law or regulation, the Board of Directors deliberates on the dismissal of the Director from his or her position or other actions, or on presenting a proposal for dismissal to a general meeting of shareholders. Before making the final decision, the Nomination Committee shall provide its opinions.
6. The Board of Directors shall supervise the training of successors to such a post as President and Representative Director based on reporting by the Nomination Committee, taking account of our Management Philosophy and management strategies.